Bufab sales and profit up in first half of 2018

Net sales rose 19% to SEK 980 million (823) in Q2 2018 for Bufab, with organic growth at 9%.

Order intake grew 18% while operating profit (EBITA) rose to SEK 98 million (78) and the operating margin to 10.0 percent (9.5)

Thanks to a similarly strong Q1, Bufab’s half year numbers were also robust, with net sales up 18% to SEK 1,925 million (1,638). Organic growth was 10% while operating profit (EBITA) rose to SEK 204 million (170).

“The favourable performance that marked the beginning of the year continued during the second quarter,” said President and CEO Jörgen Rosengren. “Solid growth at 19 percent was driven by acquisitions, increased market shares and favourable underlying growth, but also by positive calendar effects.

“Segment International accelerated the excellent earnings trend that we have witnessed in recent years. Through strengthened market shares in most markets and through successful acquisitions, we achieved growth of 25%. The gross margin improved significantly due to currency effects and price increases that exceeded the material-driven cost increases. It was also satisfying that the growth did not cause a corresponding rise in operating expenses. In total, operating profit grew by more than 50 percent. These successes give us confidence and scope for continued investment in the segment.

“On the other hand, Segment Sweden experienced a poorer earnings trend during the quarter. Growth was good, but the gross margin was lower than earlier in the year and in 2017. This means that we have not fully succeeded in offsetting the continued negative trend for the SEK and raw materials prices through price increases to customers. However, work continues aiming at a strong and stable gross margin over time, regardless of external factors. In addition, the segment’s cost level for the quarter was too high, partly due to adjustment of a and currency effects. Overall, operating profit declined, a development with which we cannot be satisfied.

“The uncertainty regarding the economic development increased during the quarter, among other factors due to the fear of a trade war. This is reflected, for example, in a somewhat weaker purchasing managers’ index, but has not yet made an impact on Bufab’s order intake. At the same time as we are watchful for signs of a downturn, our ambition is to increase our market share at the same rate as previously, or faster.

“We need to strengthen our gross margin through further price increases. In addition, we need to work to ensure that operating expenses do not increase further as a share of sales, despite the significant investments we are making in our “Leadership” programme. This requires comprehensive efficiency measures in the business in general.

“For Bufab in its entirety, we are satisfied with the quarter and with the first half of 2018. Healthy growth, an improved margin and Bufab’s best six-month profit to date are indications that our strategy for organic and acquisition-driven growth is working. Reinforced by this, we will continue to increase the investments in our strategy. The aim is to be the leading company in our industry by 2020.

I joined Torque as Editor with over a decade’s experience in publishing. I’ve worked as Editor across two different B2B magazines in the past 10 years and in more junior publishing roles before then, including advert copywriting and a stint at a local newspaper. Prior to Torque, I’ve written for the bicycle sector and the video games industry.